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It was a weak session on the Dalal Street today. The Nifty slipped half a percent to around 5,850. The Sensex closed down 126 points at 19,229.

In an interview to CNBC-TV18, Girish Nadkarni, executive director and head-equity capital markets, Avendus Capital says the market is just pausing now. "The market had risen sharply. So, it is taking its breath now. We should see good market for the next three to four months, starting from January 2013 onwards. The market is just pausing now," he elaborates.

He further says, there is still a strong expectation that the interest rates are likely to come off, maybe in the next RBI policy. "With some control over inflation, we should see a decline interest rate scenario, if not in January, certainly thereafter," he adds.

He is seeing a good year ahead for equities. For 2013, he is positive on cyclicals, interest sensitives, autos, public sector banks, and cement. "Barring consumers, capital goods and commodities, I think the rest of the sectors should do well," he asserts.

A: The market is trying to consolidate at the 5,900 level. It has not been able to break past that level for sometime. However, the market had risen sharply. So, it is taking its breath now. We should see good market for the next three to four months, starting from January 2013 onwards. The market is just pausing now.

Q: If you are positive on the market, coming into the next three-four months, what would be the fundamental reason that you would attribute to an upside potential from these levels?

A: Reforms or fiscal steps, which were necessary, the government seems to be taking most of those steps. Divestment is happening. We are expecting to see banking reforms. We have seen FDI in retail. We have seen efforts being made to control expenditure, to increase taxes. So, the efforts from the government, although very quiet, are definitely there.

There is still a strong expectation that the interest rates are likely to come off, maybe in the next RBI policy. With some control over inflation, we should see a decline interest rate scenario, if not in January, certainly thereafter. We feel very strongly about the fact that if interest rates begin coming down then you will see industrial activity pick up further. That should lead to a strong recovery in the market.

Also, we should see a shift of traditional domestic savings from the banking fixed deposits and debt instruments towards equity because the returns from mutual funds are becoming positive. I think there will be a shift towards equity. So, on the performance side, you will see companies performing better. You will have more money for equities. So, all in all, we are seeing a good year ahead for equities.

Q: You spoke about a possibility of a rate cut in the next RBI policy. Are you expecting some action next week from the RBI?

A: The RBI could surprise positively on this count much ahead of the next policy as well. Having said that, IIP numbers being strong and inflation not having come down very sharply, the RBI might just wait for the next round of things. But if it happens sooner than that, the market will be certainly positively surprised. That can spur the market right away.